Weighing the pros and cons of home purchase

#20 in a series of true experiences in real estate
July 1993, Hills Newspapers

“It’s time for me to look outside my bedroom window and see something different.”

Nancy lives in an apartment. She’s lived there for many years and likes it quite a lot. She has a little garden in the back, likes all the people in the building, and has made a friend of the owners. When something needs fixing, the owner takes care of it.

Nancy has resisted buying a house. It was never the right time, or she just didn’t have the energy to pursue it, and there didn’t seem to be any hurry.

Recently some friends of Nancy told her about a house next door to where they live. It is being renovated and will be for sale soon. The friends are urging Nancy to buy it.

What Nancy likes about the idea of buying that house:

The house is almost entirely new construction.
Nancy knows the neighbors.
She can (just barely) afford to buy this house.
She will save some income taxes.

What Nancy doesn’t like:

She hasn’t looked at any other houses. She is unsure what this house is worth.
The neighborhood isn’t perfect.
She knows next to nothing about maintaining a house.
Monthly costs will be a lot higher than her rent.

As Nancy talks to us, a conflict keeps coming up. Nancy is a single woman on the move. She’s busy. She’s often away on weekends. While she enjoys puttering in her garden, she knows nothing about plumbing, roofs, hot water heaters. It’s nice to be able to call the landlord when something goes wrong.

But she also says something quite extraordinary, something we have never heard any other buyer say in quite this way: It’s time for me to look outside my bedroom window and see something different.

Should Nancy buy a house? Should it be the house her friends have suggested? What about her vacation to Japan this summer? If she wants to go further toward buying, where would she begin?

Our first conversation with Nancy is spent assuring her that she has choices. What if she never bought a house? It wouldn’t be the end of the world. So what if she is able to save taxes by buying? No one wants to pay more taxes than they had to, but what are the tradeoffs here?

If she is going to buy a house, it’s going to take time and concentration. There are things she will need to learn, people she will have to talk to. The first thing she will need to do is find out how much of a loan she can get. If there is a question about whether this particular house is the house, she will need to do some comparison shopping. These things cannot be done while she is in Japan.

Nancy seems relieved when we say out loud, No one has to buy a house. Without being committed, she can venture further into the real estate world.

Just in case she decides to buy, she will find out how much she can borrow. She talks to a loan broker and to her credit union. She learns about loan fees and about closing costs. She begins to consider the exact costs of home ownership, the loss of her savings, the tax advantages translated into monthly dollars.

And she thinks about where in the world she would like to live, not just in her friends’ neighborhood, but in other areas. What kind of house can she buy where?

How far is she willing to drive to get to work? Which house will have that special appeal that would make all this worthwhile?